Shares of Vasogen Inc. tumbled more than 40 percent after the company said it was stopping the Phase III SIMPADICO trial of its Celacade technology in patients with symptomatic peripheral arterial disease (PAD).

The decision followed a recommendation from the trial's external safety and efficacy monitoring committee (ESEMC) to the steering committee to close out the trial, citing the "absence of a sufficiently strong efficacy signal," based on the available data. The ESEMC's observations also included a small number of patients with malignancies, though further investigation concluded that no safety concerns were related to the trial.

Vasogen's stock (NASDAQ:VSGN) fell $1.87 Tuesday, or 44 percent, to close at $2.38.

"While we are obviously disappointed with these developments," David Elsley, Vasogen's president and CEO, said during a conference call, "we are now looking forward to the steering committee's complete analysis of the data."

All patients completed clinical assessments needed to evaluate the primary endpoint, and the majority of those subjects also completed an additional six months of treatment required by the study protocol. Full data are expected in the fourth quarter, Elsley said.

The SIMPADICO trial enrolled 553 patients, with an average age of 67, who had moderate to severe PAD. Of those patients, 72 percent were male and 91 percent were current or ex-smokers. The trial's primary endpoint was the change in maximal walking distance after six months of treatment.

The company is still blinded to the data, Elsley added, so "we are left to speculate on what the wording absence of sufficiently strong efficacy signal' really means."

The Celacade technology, which targets chronic inflammation involved with cardiovascular disease, is designed to deliver oxidative stress to a sample of the patient's own cells. During the monthly outpatient procedure, a small blood sample is collected into the Celacade disposable cartridge, where it is exposed to oxidative stress before being re-administered to the patient through an intramuscular injection.

While awaiting the full SIMPADICO results, the company will continue testing Celacade in a second Phase III study. The ACCLAIM trial is evaluating Celacade in 2,400 patients with heart failure due to ischemic heart disease or cardiomyopathy. The primary endpoint in that trial is based on mortality and cardiovascular-related hospitalization.

Since the patient populations in both studies are different, Jay Kleiman, Vasogen chief medical officer, said he doesn't expect this week's news about the SIMPADICO study to affect the ongoing ACCLAIM trial. ACCLAIM reached full enrollment in May, and the company expects the study to reach its primary endpoint later this year.

Vasogen said the safety profile of Celacade has remained unchanged, despite early observations by the ESEMC. An independent oncology expert retained by the steering committee reviewed 14 cases for potential malignances, and concluded that nine of those were found to be either nonmalignant or they involved conditions that pre-existed enrollment or randomization, Elsley said.

"We've observed no evidence of any safety issues with respect to Celacade across all our trials to date," he added.

Toronto-based Vasogen, which develops immune-modulation therapies, recently began clinical development with the first of its neurological inflammation products, VP025, which demonstrated safety and tolerability in a Phase I trial. That drug is being developed to regulate chronic inflammation of the central nervous system associated with severe neurological conditions, such as Alzheimer's disease. Preclinical work is ongoing in other indications, including Parkinson's disease.

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